- Asian shares keep early-day optimism, backed by stimulus hopes.
- China’s golden week, Japan’s technical glitch restrict the latest moves.
- RBI’s monetary policy decision can offer final push to the market liquidity.
After an initial risk-on play, Asian equities remain mostly inactive amid a trading halt in Japan and week-long holidays in China. Also restricting market moves is a lack of major data/events and mostly empty news feeds. Even so, hopes of the US stimulus, coupled with receding pessimism surrounding the Brexit, keep the market players positive.
While portraying the mood, MSCI’s index of Asia Pacific outside Japan gains 0.30% whereas Australia’s ASX 200 rises 1.5% to 5,903 ahead of Thursday’s European session. New Zealand’s NZX 50 is also gaining 0.80% with no major data while upbeat prints of South Korean Trade Balance help KOSPI to rise 0.85% intraday by the time of the press. Further, downbeat Indonesian Inflation data couldn’t defy IDX Composite buyers, up 1.0% on a day to 4,919.
Additionally, India’s BSE Sensex adds over 500 points, or 1.35%, to 38,587 ahead of the Reserve Bank of India’s Interest Rate Decision, up for publishing at 06:15 GMT. For this, analysts at the TD Securities said, “We expect the RBI to keep policy on hold, with the repurchase rate likely to be maintained at 4% and reverse repo at 3.35%. Activity continues to be under pressure and the economy is heading for a sharp potentially double-digit contraction this year amid an unrelenting spread of Covid-19. However, the RBI's hands continue to be tied by a surge in inflation, with the CPI breaching the upper band of 6% for a fifth consecutive month due largely to COVID-19 related supply constraints. As such, the RBI will likely continue to focus on improving monetary transmission given the continued liquidity surplus in the banking system.”
It’s worth mentioning that Japan’s Jibun Bank Manufacturing PMI for September and Tankan Large Manufacturing Index for the third quarter (Q3) flashed welcome readings but failed to be cheered by the Tokyo traders due to the hardware crash. The authorities have recently confirmed that the trading will resume on Friday.
Not only the Asian risk barometers, but S&P 500 Futures and the US 10-year Treasury yields also portray a mildly optimistic trading environment amid hopes of the American aid package. Other than the stimulus talks, US ISM Manufacturing PMI will also play its role to direct near-term market moves ahead of Friday’s key US employment data.
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